The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
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The investigation involves eight companies from various sectors, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros. The FTC has requested information about how these businesses’ pricing practices may affect privacy, competition, and consumer protection.
The investigation centers on a technique referred to as “surveillance pricing,” or “dynamic pricing,” whereby different prices are offered to consumers for identical products based on their individual traits or behaviors, such as geographic location, demographics, credit history, and online shopping activity.
Many of the firms under scrutiny provide transaction, sales, and pricing services to major corporations in the U.S. and around the world. Task Software, for instance, manages transactions for significant hospitality chains like McDonald’s and Starbucks. Revionics specializes in retail price optimization and analytics for retailers including Home Depot. Pros, which offers AI-driven pricing solutions, has notable clients like Nestlé, HP, and United Airlines, and partners with Microsoft for technology development.
The FTC aims to uncover the realities of this “opaque market” that classifies consumers and determines targeted prices for products and services.
FTC Chair Lina Khan emphasized the potential risks to consumer privacy, stating, “Firms that harvest Americans’ personal data can put people’s privacy at risk. Now firms could be exploiting this vast trove of personal information to charge people higher prices. Americans deserve to know whether businesses are using detailed consumer data to deploy surveillance pricing, and the FTC’s inquiry will shed light on this shadowy ecosystem of pricing middlemen.”
The agency is seeking information on four main areas: the types of surveillance pricing products and services offered by each company; methods of data collection; customer and sales information; and the impact of these practices on the prices consumers ultimately pay.